Samsung Pay could have a major security flaw

Fraudsters may be able to steal credit card information from Samsung Pay users by intercepting their purchases at the point-of-sale, according to a presentation made at the Black Hat security conference.

Security analyst Salvador Mendoza believes Samsung Pay's payment tokens — the single-use data that mobile wallets use in place of a cardholder's full card number at a wireless transaction - are "collectible at a short range by specialty hardware," according to Apple Insider. That could allow thieves to access users' payment data. Samsung noted that tokens can indeed be intercepted in some scenarios, but it's so challenging that it's unlikely to occur.

If it remains unresolved, it could impact the entire mobile-wallet ecosystem.

Such a flaw could eliminate a key advantage of mobile payments for retailers.Tokenization is what makes mobile payments more secure than card-present payments. For example, when NCR recently uncovered a chip card security flaw, it encouraged merchants and consumers to utilize mobile payment apps as much as possible to reap their security benefits. Samsung believes this threat is an "acceptable" potential risk on par wth other types of fraud, which means that mobile payments may not be as safe as believed.

And for consumers, it could strengthen barriers to usage. Despite tokenization, most consumers don't perceive mobile payments as safe. Sixty-seven percent of nonusers are concerned about the technology's security, and 46% of consumers believe in-store mobile payments are somewhat or very unsafe. News of the potential Samsung Pay flaw could further entrench those beliefs and keep adoption low.

Despite these flaws, mobile payments are becoming more popular. But they still face some high barriers, such as consumers' continued loyalty to traditional payment methods and fragmented acceptance among merchants. But as loyalty programs are integrated and more consumers rely on their mobile wallets for other features like in-app payments, adoption and usage will surge over the next few years.

Evan Bakker, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on mobile payments that forecasts the growth of in-store mobile payments in the U.S., analyzes the performance of major mobile wallets like Apple Pay, Android Pay, and Samsung Pay, and addresses the barriers holding mobile payments back as well as the benefits that will propel adoption.

Here are some key takeaways from the report:

In our latest US in-store mobile payments forecast, we find that volume will reach $75 billion this year. We expect volume to pick up significantly by 2020, reaching $503 billion. This reflects a compound annual growth rate (CAGR) of 80% between 2015 and 2020.

Consumer interest is the primary barrier to mobile payments adoption. Surveys indicate that the issue is less the mobile wallet itself and more that people remain loyal to traditional payment methods and show little enthusiasm for picking up new habits.

Integrated loyalty programs and other add-on features will be key to mobile wallets taking off. Consumers are showing interest in wallets with integrated loyalty programs. Other potential add-ons, like in-app, in-browser, and P2P payments, will also start fueling adoption. This strategy has been proved successful in China with platforms like WeChat and Alipay.

In full, the report:

Forecasts the growth of US in-store mobile payments volume and users through 2020.

Reviews the performance of major mobile wallets like Apple Pay and Samsung Pay.

Addresses the key barriers that are preventing mobile in-store payments from taking off.

Identifies the growth drivers that will ultimately carve a path for mainstream adoption.

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